School fee tax breaks survive Revenue plan
An Inland Revenue scheme to withdraw lucrative tax breaks for educational trust school fee plans has been ditched after fierce opposition.
The Revenue aimed to start taxing six trusts in April next year following the Charity Commission’s decision to remove them from its register six months ago. Up to 15,000 parents faced paying thousands of pounds more for their children’s education because of the move which would have taxed interest on schemes at 34%.
Tax experts advised parents to steer clear of the fee-paying schemes while they were shrouded in uncertainty, recommending PEPs or TESSAs instead.
Detailed discussions between the Revenue, Charity Commission and the six trusts, SFIA Educational Trust, SFIA Educational Trust Ltd, Equitable Charitable Trust, Castle Educational Trust, S&P Charitable Trust and Sun Life Educational Trust, led to the policy change, with the trusts agreeing to separate charitable business from other concerns.
A Revenue spokeswoman said: ‘We reacted to the Charity Commission’s decision, but said we wouldn’t tax them before next April. The trusts have been discussing how they can secure the relief and we have confirmed that we won’t be collecting tax on school fee plans in existence by 20 June this year.’
Jim Malt, a senior manager at KPMG in Norwich, said: ‘These schemes are a useful weapon for people looking to invest. Their removal would have put investors at a disadvantage.
‘The tax exemption provides quite a beneficial effect, meaning that the difference on returns can be quite significant,’ he said. ‘Taxation would have been yet another blow to people who want to educate their children privately.’
